Trade is a critical component of economic growth in newly settled societies. This article tests the impact of ship traffic on the Cape economy using a time-series smoothing technique borrowed from the business cycle literature and employing an econometric procedure to test for long-run relationships. The results suggest a strong systematic co-movement between wheat production and ship traffic, with less evidence for wine production and stock-herding activities. While ship traffic created demand for wheat exports, the size of the co-movement provides evidence that ship traffic also stimulated local demand through secondary and tertiary sector activities, supporting the hypothesis that ship traffic acted as a catalyst for growth in the Cape economy.

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Fourie, J. and Von Fintel, D. (forthcoming). The fruit of the vine: an augmented endowments-inequality hypothesis and the rise of an elite in the Cape Colony. In Amsden, A., Robinson, J. and DiCaprio, A. (eds.), Elites in Development. Helsinki: UN-WIDER.

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Giliomee, H. and Mbenga, M. (2007). New History of South Africa. Cape Town: Tafelberg.

Ward, K. (2007). ‘Tavern of the seas?’ The Cape of Good Hope as an oceanic crossroads during the seventeenth and eighteenth centuries. In Bentley, J., Wigen, K. and Bridenthal, R. (eds.), Seascapes, Littoral Cultures, and Trans-Oceanic Exchanges. Honolulu: University of Hawaii Press.